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Real Estate Big Data

NAR Report: How the home search process has changed in 2020

(REAL ESTATE BIG DATA) The 2020 National Association of Realtors annual report examined the home search process, with buyers utilizing online tools and agents to help find the perfect home.

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Woman holding phone in lap, doing an online home search.

There’s extensive data and topics to research when it comes to the National Association of Realtors annual report – everything from the trust home sellers place in agents, home financing, home sales (naturally), and real estate professionals and their relationship with buyers. Practically every angle of this important market has been broken down and examined to help deliver a clear picture of real estate sales across the nation. It’s all extremely valuable and highly worth perusing (psst: search “NAR report”).

Of course, searching for a home is a pivotal and significant part of the entire process, and the NAR report has delivered an in-depth analysis of everything as well. Let’s take a look and see what current trends were revealed.

Initial Search

When it comes to looking for a home initially, there are two main options that most buyers tend to go with – searching online versus contacting outside help (primarily a real estate agent, but family and friends were also viable resources).

With the advent of the pandemic in 2020 keeping several people at home, online searches were at their all-time highest (though this trend has continued to increase in recent years). In fact, a staggering 97% of all buyers utilized the internet at some point during the process.

With the advent of the digital listings and databases, it’s been shown that 43% of buyers are first looking for properties online, compared to 18% that go to a real estate agent first. Speaking broadly, first time buyers were more likely to take this step first, and there was a direct increase as buyers were older (though this percentage decreases after the
age of 64).

First Step Taken During the Home Buying Process, First-time and Repeat Buyers

Real estate agents were definitely the second most used avenue during the search process, and this did increase with aging demographics as well. Perhaps due to greater familiarity with searching online, younger generations did look up information on buying their first home at a higher rate than older counterparts (13% with the younger group versus 6% with the oldest).

First Step Taken During Home Buying Process, by Age

Information Sources

Of course, when it comes to where to find information and best to listen to, real estate professionals reigned supreme (91% reported successfully being helped by agents), and were the primary resources for every demographic – first time buyers, repeat buyers, new homes, and previously owned homes. Online searches and open houses came second and third respectively, and yard signs and online video sites also saw a lot of utilization. Methods after this – print advertisements, billboards, relocation companies, and television sources – finished out the bottom, but there was a wide margin between them and other methods.

Information Sources Used in Home Search, by First Time and Repeat Buyers, and Buyers of New and Previously Owned Homes

Length of Time From Searching to Buying

Perhaps again owing to the nature of the pandemic, the average time a buyer used from search to purchase decreased (a first since 2014), needing only eight weeks. A median of nine homes were looked at (five online only).

First time buyers needed a little more time on average than repeat buyers (nine versus eight weeks). Agents were still utilized frequently in all instances, and were usually contacted within three weeks of the initial search.

Length of Home Search, by Region

Difficulty During the Process

It should come as no surprise that searching for a home is a massive undertaking, and can prove to be an arduous process given the magnitude of what it entails. Just finding the right home to purchase is seen as the most difficult step, with 53% of buyers saying it gave them the most trouble. Paperwork followed at 17%, while simply understanding the process from start to finish was cited by 15% of buyers. As might be expected, first time buyers reported more difficulty across the board in all areas than repeat buyers.

Most Difficult Steps of Home Buying Process by First Time and Repeat Buyers and Buyers of New and Previously Owned Homes

Online Searching Trends

Online searching was first examined in 1995, where only 2% of buyers would utilize the internet during their home search process. This increased repeatedly until 2009 to 90%, dipped slightly until 2012, and has since generally been rising. It was almost an even split between mobile and desktop devices, with younger buyers focusing more on mobile and older more likely to use a desktop/laptop.

Percentage of Time Using Devices in Home Search, by Age

There’s actually a lot of information to process when it comes to online search trends – married couples versus single buyers generally searched online more, desktop searches utilizing video sites more often than mobile (46% versus 40%), and mobile users generally finding their home through their online searches while desktop might generally direct buyers to complete the process with a real estate agent.

Value of Website Features

Of course, how a website helps direct a buyer is extraordinarily important to the home search process. Photos were the clear primary resource here, with 89% of buyers saying that images were extremely useful in the process.

Detailed information about properties followed at 86%, and then there was a significant jump to the next most important feature, as buyers reported that floor plans were important 67% of the time).

Value of Website Features

Next Steps After Searches

Once homes were found online that proved attractive, more than half of first (51%) and repeat (59%) buyers would proceed to walk through the home. Following this, buyers might then see the home but choose to skip seeing the inside (37%), or would contact a real estate agent for additional information (35%). First time buyers tended to look for more information in general (on the home itself, about mortgages, and so on) to better prepare themselves.

Actions Taken as a Result of Internet Home Search, First-Time and Repeat Buyers

Method of Home Purchases

Perhaps the best conclusion to draw here is the home purchase itself. When that time comes, agents are still used the overwhelming majority of the time regardless of a buyer using mobile or desktop more than 50% of the time. With the former, an agent helps 88% of the time, and 90% of the time otherwise. Builder agents or direct contact with the previously owner – known or not – are far overshadowed here.

Method of Home Purchase, by Use of Internet

Satisfaction with the Search Process

Given all of the tools and data available to buyers, 64% reported that they were very satisfied with the entire process, 30% were somewhat pleased, and the remaining group said they were unhappy.

Satisfaction with Buying Process

Conclusion

The NAR Report really shows an incredibly exhaustive look into the home search process. Generally speaking, with so much information available online, buyers were eager to search with devices first and speak with real estate agents early on in the process. Further, digital resources such as photos, floor plans, and other data proved incredibly useful in helping determine if buyers should seek out the home or continue their search.

Perhaps the best conclusions to draw here are that first and repeat home buyers are actively consuming data from online sources, but still rely heavily on agents to help guide them through the process (including ultimately with purchasing the home). Given the unique circumstances of the 2020 Pandemic, it’s clear that searches and next steps are best started through websites and other repositories, and are then usually followed with experts that can provide their professional experience. It’s likely that these trends will – on average – continue in ensuring years.

Robert Snodgrass has an English degree from Texas A&M University, and wants you to know that yes, that is actually a thing. And now he's doing something with it! Let us all join in on the experiment together. When he's not web developing at Docusign, he runs distances that routinely harm people and is the kind of giant nerd that says "you know, there's a King of the Hill episode that addresses this exact topic".

Real Estate Big Data

NAR Chief Economist predicts housing market uncertainty

(BIG DATA) Warning bells on the housing market have been ringing for over a year. While this prediction isn’t a surprise, it’s disappointing news.

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Multitude of colorful homes representing housing market.

The housing market is booming. Many experts are concerned about another bust like we experienced in 2008, but the conditions are much different today. Homeowners aren’t extended like they were when the market crashed in 2008. National Association of Realtors® Chief Economist Lawrence Yun suggests that the housing market is still uncertain, even though he says, “housing kept the economy afloat” during the pandemic.

What is impacting the housing market? 

Yun cites record-low inventory and inflation as “curveballs” to the housing market. Many economists, including Yun, have been concerned about low inventory for many years, especially in certain markets. Even though builders are working hard to construct new residences, supply chain and labor issues are not accelerating the process.

Yun is more concerned about inflation impacting the housing market. He says,

“wages have risen by 6% from one year ago…but inflation is 8.5%.”

Rising mortgage rates have made mortgages cost $300 to $400 a month more, according to Yun. Many working families can’t afford that. Yun predicts inflation is going to be high for several months. The market will slow as the Federal Reserve raises rates.

Yun also cites the Russia-Ukraine war as another contribution to the uncertainty of the market. The war is also driving inflation, not just overseas, but in the United States. With gas prices climbing higher each week, this is impacting the housing market.

Is real estate a good investment in this market?

Last year, when Yun opened the Residential Economic Issues & Trends Forum at NAR’s annual REALTOR® Conference & Expo in San Diego, he expected the “housing sector’s success to continue,” but he did suggest that 2022’s performance wouldn’t exceed 2021s.

“Rising rents will continue to place upward pressures on inflation,” he said. “Nevertheless, real estate is a great hedge against inflation.”

There’s a lot we don’t know about the future. It’s disappointing to think that the housing market may be uncertain, but real estate is still a good investment.

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Real Estate Big Data

Housing starts stagnate, market conditions are rapidly shifting

Housing starts for April stagnated, marking the second consecutive months of declines, and more renters being left out of this shifting market.

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construction home growth housing starts

Housing starts stagnated in April, down 0.2% from the prior month, according to the U.S. Commerce Department.

The sentiment appears to be that although this marks the second straight month of dips, most are seeing today’s news as a positive, especially as construction of new homes was expected to fall 2.4% in April.

Further, housing starts are up 14.6% from April of last year, driven primarily by multifamily construction.

But it’s worth not getting overly excited, given that permits dipped 3.2% in April which is a forward-looking indicator, so expect starts to continue cooling in a time where we quite need the inventory.

Demand for housing inventory remains high, but the National Association of Home Builders reports today that confidence in the single-family housing market fell dramatically in May, marking the lowest level in two years.

Dr. Lawrence Yun, Chief Economist at the National Association of Realtors said in a statement, “The worst of the housing shortage is ending, but market equilibrium between supply and demand is still some ways off.”

He notes that as mortgage rates increase, builders “are chasing rising rents, with fewer homebuyers and more renters being forced to renew their leases,” noting that even prior to the interest rate increases, rents were rapidly rising and vacancy rates rapidly declining.

Pointing to another market shift, Dr. Yun notes that “Some degree of a return to the office is also fueling back-to-city living where high rises are concentrated.”

That’s a problem.

“Even as home sales look to trend back to pre-pandemic levels after the big surge of the past two years,” concludes Dr. Yun, “inventory will not return to pre-pandemic conditions. That means home prices will get pushed even higher in the upcoming months, albeit modestly, given the supply-demand imbalance.”

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Real Estate Big Data

Home prices jump double digits in majority of American metros [report]

(REAL ESTATE) Housing affordability was already a widespread challenge before current economic pressures were applied, but now home prices are skyrocketing.

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homeownership home prices

As home sales slide and mortgage rates rise, home prices in 70% of 185 measured metros saw a double digit annual increase in Q1, according to the newest data from the National Association of Realtors (NAR), up from 66% in the previous quarter.

The Southern region accounted for 45% of home sales in Q1, and experienced a 20.1% increase in annual home prices (compared to 14.3% just the quarter prior). Home prices in the Midwest jumped 8.5% annually in Q1, while The Northeast rose 6.7%, and the West increased 5.9%.

The median sales price of a single family existing home has now hit an astonishing $368,200.

“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022,” said NAR Chief Economist, Dr. Lawrence Yun. “Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.”

Yun expects supply levels to improve, and for “more pullback in housing demand as mortgage rates take a heavier toll on affordability,” given that “there are no indications that rates will ease anytime soon.”

At first blush, price appreciation sounds lovely to anyone that owns a home, given that it is the largest investment most Americans will ever make.

But regarding today’s report, several homeowners told us that they now feel trapped, and that if they sold their current home, even if they purchased a new house at that same price, they would likely have to downgrade.

Affordability is an ongoing problem weighing down the housing sector. NAR reports that the monthly mortgage payment on a typical existing single-family home with a 20% down payment rose to $1,383 (up $319, or 30%, from one year ago). Families now typically spend 18.7% of their income on mortgage payments (but only spent 14.2% one year ago).

“Declining affordability is always the most problematic to first-time buyers, who have no home to leverage, and it remains challenging for moderate-income potential buyers, as well,” Dr. Yun observed.

Map of how home prices are behaving nationally

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